Innocuous phrase may have cost Eddie Alvarez seven figures

Bellator

A legal battle over what the right to match an outside offer really means has already cost Eddie Alvarez a huge amount of money, and appears will also cost him a chunk of the prime of his career.

What seemed to be an innocuous phrase in a contract signed with good intentions, has turned into a battle that could have already cost Eddie Alvarez upwards of $1 million.

And it could lead to a legal ruling that in some form will set a legal precedent in determining what the definition really is of matching an outside contract offer.

Alvarez, 29, became regarded as one of the top lightweights in the world, as well as one of the most exciting, while fighting in Japan in 2008. When Bjorn Rebney formed Bellator later that year, and got a television deal with ESPN Deportes for the first season only in Spanish, a premium was placed on signing Hispanic fighters. Alvarez, of Puerto Rican descent, was the perfect fit to be the company's flagship fighter. He was marketable, exciting, had beaten top level competition already, and was not under contract with one of the top organizations in the U.S.

To get Alvarez, Bellator offered a deal worth considerably more money than UFC's offer at the time. Everything seemed positive about the relationship. Unlike other stars who have failed to deliver in the unpredictable environs of a tournament, Alvarez came through in a big way during that first season. He became Bellator's initial lightweight champion during the company's first season in 2009, finishing all three opponents via submission.

Bellator quickly upgraded from Spanish language television to Fox Sports Net. From there, they moved to MTV2, where Alvarez suffered his only loss in the Bellator cage, dropping his title to Michael Chandler in what is generally considered the greatest fight in company history.

That's when problems started. The fight made a Chandler vs. Alvarez title match the biggest fight possible in the promotion's history. But Bellator's strict matchmaking rules made it impossible at that point to put together the fight fans wanted to see more than any other.

For Alvarez to get a shot at Chandler, he'd have to enter and win another three fights over three months. At the time he only had two fights left on his contract, and turned down entering the tournament. In October, after scoring knockouts over Shinya Aoki and Patricky "Pitbull" Freire, Alvarez appeared to be in an almost perfect position.

With Bellator, by this point having a majority interest owned by Viacom and headed to Spike TV, keeping the biggest star on the roster was a major priority. For UFC, signing Alvarez would weaken Bellator from a star standpoint in their move to Spike. UFC, under similar circumstances, had signed up Bellator's middleweight champion, Hector Lombard, a few months earlier. Lightweights were generally considered UFC's deepest division when it came to talent, leaving Alvarez an almost endless supply of fresh matchups.

The timing couldn't have been better to be a free agent. UFC's offer didn't disappoint. He was offered an immediate title shot at the winner of a Dec. 8 match between champion Benson Henderson and challenger Nate Diaz, earmarked for UFC 158 on March 16 in Montreal. That show was headlined by Georges St-Pierre, the UFC's biggest drawing card. Alvarez's UFC offer included a guaranteed pay-per-view percentage on his first show with the company.

St-Pierre had topped 700,000 buys on every show he'd headlined fight the previous four years. There was no reason to believe that anything should be different. This was even before Nick Diaz, easily his best possible opponent to draw on pay-per-view in his weight class, was announced as his opponent.

For his first fight, Alvarez would make $70,000 in base pay, and another $70,000 if he won. He'd also get $85,000 as the first installment of a $250,000 bonus. Bellator matched all that in a proposed match with Chandler.

The value in winning the UFC title would open up all kinds of opportunities that a Bellator title couldn't match. Alvarez's bonuses, provided the show did 700,000 buys, would garner him another $850,000, life-changing money. In one night, Alvarez would earn more than he made in his four years in Bellator. Alvarez's pay-per-view bonus for the show would have been $1.35 million if the show hit 900,000 buys, or $1.60 million if the show hit the elusive 1 million mark. One could make an argument that adding a Henderson vs. Alvarez title match to the St-Pierre vs. Nick Diaz show may have increased the number above what it ended up doing, because of how rare a show is nowadays with two title matches of that caliber.

The same pay-per-view bonus percentages offered by Bellator in its matching the contract, which didn't kick in until 200,000 buys, would likely be worth nothing. If Bellator would have or is to put Alvarez vs. Chandler on pay-per-view, it would be almost impossible to conceive of reaching even the bottom level for a bonus.

Bellator is matching the wording, but offering a contract nowhere close to as lucrative as the UFC's in reality. This almost guaranteed Alvarez and Bellator ended up in court.

Things dragged out to where the deadline of getting Alvarez on the March 16 show had passed. Instead, his earliest debut if he could sign with UFC was moved to UFC 159, April 27 in Newark, N.J., the show headlined by Jon Jones vs. Chael Sonnen. That show was expected to do well on pay-per-view, but not at St-Pierre vs. Diaz levels.

But legal round one went to Bellator. Judge Jose Linares of U.S. District Court in New Jersey ruled against Alvarez in his attempt to be granted an injunction that would allow him to fight at UFC 159. UFC's pay-per-view track record wasn't enough to convince Linares that the contracts weren't of equal value. Linares also wouldn't rule that a guaranteed fight on FOX (where UFC's last three events have averaged more than 4 million viewers live) wasn't an equal match for a guaranteed fight on Spike (where Bellator averages 800,000 viewers per show live). But Linares did say that a jury may rule differently. On April 17, Linares ruled against Bellator, in its attempt to get the case thrown out.

For now, Alvarez has lost the opportunity at significant bonus money that may not come up at that level again. He's also in the process of losing a significant amount of time in the prime of his career by sitting out until the case is resolved, as opposed to ending the case and returning to Bellator.

But no matter how the case turns out, for those in contact negotiations, it serves as a warning that a phrase that seemed so fair, and cut-and-dried, when put in a contract could end up being anything but.

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